We Don’t Buy the Arguments on Valeant Pharmaceuticals Intl Inc (VRX) in Today’s Bear Report: Cannacord

Canaccord’s healthcare analyst Neil Maruoka weighed in today with his views on Valeant Pharmaceuticals Intl Inc (NYSE:VRX), following a bear report by Citron Research implying that Valeant artificially inflates its revenue through its relationship with specialty pharmacies including Philidor and R&O.

Maruoka commented: “Based on its disclosures, Valeant has clearly indicated that it only books revenue when the product is dispensed to the patient. Further, any inventory held at the specialty pharmacy level is held on Valeant’s books (and not recorded as revenue until sold to a third party.) As such, even prior to these accusations, we believe that Valeant has confirmed it accounts for its relationships properly.”

“We can say with high confidence that we believe Mike Pearson and his management team would not knowingly inflate revenue. Nonetheless, this has come down to a credibility issue and, given the ongoing attacks on Valeant (for drug pricing, infrastructure and R&D investment, etc.), we believe that few investors would be willing to step in front of this stock. However, given the substantial weakness on the back of these questionable arguments, we would view this as a buying opportunity,” the analyst concluded.

Maruoka reiterated a Buy rating on Valeant shares, with a price target of $235, which represents a potential upside of 98% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Neil Maruoka has a total average return of -21.5% and a 12.8% success rate. Maruoka has a -10.4% average return when recommending VRX, and is ranked #3760 out of 3795 analysts.

Out of the 20 analysts polled by TipRanks, 15 rate Valeant stock a Buy, 4 rate the stock a Hold and 1 recommends Sell. With a return potential of 116.1%, the stock’s consensus target price stands at $256.29.



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